A thermodynamic analysis of fuel cells and heat engines shows that an energy conversion process that occurs at constant temperature is more efficient than a process that relies on large temperature differences. This chapter explains the fundamental principles of engineering thermodynamics, chemical thermodynamics, and electrode kinetics. The thermodynamics section shows that the ideal fuel cell is a less irreversible energy conversion device. The section on engineering thermodynamics covers the First and Second Laws of Thermodynamics, heat engines and the Carnot cycle, entropy and exergy, efficiencies based on the First and Second Laws, and exergy loss during heat generation. The chemical thermodynamics section is based on the change in Gibbs energy, which is used to derive the Nernst equation.